ELOI AND MORLOCKS

The Eloi, like the Carolingian kings, had decayed to a mere beautiful futility. They still possessed the earth on sufferance: since the Morlocks, subterranean for innumerable generations, had come at last to find the daylit surface intolerable.655

The science-fiction novels of H. G. Wells are undoubtedly more than fantasies located in imagined future worlds. Wells’ first book in the genre, The Time Machine, is a critique of utopian ideas, set in the year 802701, in which the human race is divided into two groups, the subterranean workers, the Morlocks, and the decadent Eloi.

Considering a gelato to go with my coffee order, sitting in a well-appointed establishment on the fringes of Yerevan’s Republic Square, I thought of Wells and his vision of a split humanity. It is impossible not to consider Wells’ ideas, which play out amid everyday life here. The anointed few, the Eloi, and the majority of have-nots, the Morlocks, who toil to survive amid the economic malaise that dominates their nation.

Not surprisingly for a nation which has elected to lock itself, even before independence, into an illegal land grab in Nagorno-Karabakh, tiny Armenia has been subject to an ongoing economic chill from its bigger, wealthier and better endowed neighbours, Azerbaijan and Turkey, which dominate the economy of the region.656

As the Soviet Union unravelled in the late 1980s, politicians in Yerevan made a calamitous choice, to revive their historic dream, to create a ‘Greater Armenia’.657 In the face of obvious and dramatic political and economic cost, their decision would have profound consequences for the minuscule nation and its people.

A quarter of a century has passed since that fateful decision. In the centre of the capital is the picturesque Republic Square, scene of many of the 2018 protests that upended attempts by long-time political master Serzh Sargsyan to ‘do a Putin’ and cling to power permanently through a flip-flop between Presidency and Premiership.658

A massive political shake-up, following weeks of mass demonstrations against corruption and cronyism, came to a delightful backdrop. Centred around Republic Square, it showed Armenia at its best on international newscasts, with the pink and yellow neoclassical architectural ensemble that includes Government House, Armenia’s Natural History Museum and National Gallery, and the ministries of Foreign Affairs and Transport and Communications.

Also there is the Armenia Marriott Hotel, where many foreign journalists and camera crews lodged during the crisis, close to the action and ensconced well away from the reality of normal life in Armenia. With its swanky cars, the boulevards, some high-end branded shops and outdoor cafés that remind one of Paris, the façade of Republic Square, is exactly how Sargsyan and his predecessors would like to portray their nation to the rest of the world.

The real story, however, is something more of an eye opener. Within several hundred metres of Republic Square a different picture begins to emerge. Armenia’s people have lapsed into a laconic acceptance of their fate, the crumbled pavements, rubbish-strewn streets and presence of an army of beggars and delinquent drug addicts. They are indicative of Armenia’s plight.

Indeed, as we discovered, away from Yerevan itself, the situation is markedly worse, setting the stage for the wholesale recruitment of young girls from impoverished regions by the nation’s sex barons.

An absence of effective institutions – a credible and independent judiciary, accountable police force, competent parliament and a responsible executive – has meant that, across a quarter century, the nation has struggled to transit to a more democratic and accountable system. Economic disarrangement and the regional isolation that comes with Armenian’s expansionism has had a clear result.

As the Foreign Policy Journal observed in October 2011: Armenia’s weak economy not only prevents development of the country, but it also creates demographic problems. According to Forbes’s newest ranking, Armenia has the second worst economy after Madagascar. Such an economy decreases the population of the country because citizens often opt to leave the country in search of better life...

It is important to mention that after independence in 1991, 1.1 million Armenians left their motherland to achieve a better quality of life... from the second worst economy in the world and with limited trade and investment opportunities...

The only solution for Armenia is the liberation of the internationally recognised Azerbaijani lands. Only after that can Armenia benefit from trade with Turkey and Azerbaijan. Armenia can also get a chance to participate in future projects in the region which would be beneficial for its economy and increase its importance in the region.659

According to the Asian Development Bank, in Armenia circa-2016, 29.4% of the population lived below the national poverty line660 leaving the nation almost tied with Pakistan in global league tables, while The Borgen Project adds: In 2010, when the head of the household was unemployed there was a 50% chance they lived below the poverty line. The reported unemployment rate in Armenia is 16%. The average job search is 20 months.

Unemployment benefits in Armenia are minimal, so a large percentage of the unemployed do not register. The number of unemployed people in Armenia is estimated to be closer to 30%... There is low labour force participation in Armenia. Around 70% of women in Armenia are unemployed and only 55% of women who are of working age are active in the economy... over one quarter of Armenians live in poverty today.661

For decades, despite billions of remittances from diaspora and expatriate Armenians flowing into the country, huge financial support and subsidies from Russia, the nation’s leaders have failed to build any coherent forward motion in the economy. There have been gains on paper but, coming from such a woeful position, economists have in general taken a circumspect view. Successive governments have promised to provide an Asian-style ‘Tiger Economy’, but barely delivered a cat’s purr.

Yet despite widespread poverty across the small nation, Republic Square still resonates to the sounds of the multi-cylinder engines of the latest luxury cars.

Not even the somewhat debatable source of the funds for their flashy cars and iPhone Xs brings them shame. Neither does the bedraggled state of those beyond the perimeters of the café in which they sit, strangely oblivious.

One thinks of the social commentary provided by The Time Machine, and a society where the pretty elite, the Eloi, are also portrayed as lazy and idiotic, living a life of ease. This contrasts with the Morlocks, a particularly low-class underground species.

In The Time Machine, the Morlocks emerge above ground, of course, to eat their Eloi cousins. In contemporary Armenia, however, this is prevented by Yerevan’s notoriously feisty police, posted prominently around Republic Square, in order to ensure the nation’s Eloi are not interfered with.

The Morlocks did somewhat surprisingly get their way in April 2018, of course, when then President-Prime Minister and leader of the Eloi establishment, Serzh Sargsyan, tried to circumvent terms limits.

It remains to be seen if his successor, Nikol Pashinyan, is himself a man-of- the-people, a Morlock, which he attempts to portray.

Certainly when we visited, however, Yerevan’s Eloi elite remain in place, despite the brief uprising against the established order of society. After that brief interruption when they remained decidedly low-key, Wells’ two societal groups were much in evidence.

Over a series of warm September afternoons, with my guide, head of a prominent non-governmental organisation, we begin our tour of Armenia’s high society in Brioche Boulangerie, reputed to have the ‘best croissants in Yerevan’. Over a pair of skinny lattes, she guides me around the room.

In one corner is the deputy head of the immigration department. His wife is nowhere to be seen. He giggles and flirts a little with a pretty young thing, before they head off. My associate explains that it is an open secret that he has a mistress or two ‘stashed away’ in high-end apartments dotted around the city.

The source of his apparent wealth, as his attractiveness to the opposite sex, remains something of a mystery.

Near the window, but less obvious perhaps, is Vladimir Gasparyan, sacked as head of the police service in May. Gasparyan adopts a more relaxed pose, in between jobs, or indeed, as it is explained, not needing to work anymore.

He is a multimillionaire and looks the part. Gasparyan was not subtle in his police role, accused of bludgeoning errant Morlocks when he saw it necessary. He brings the same lack of subtlety to his sartorial ensemble.

A little later in the week, again in Brioche Boulangerie, we see another one of the nation’s most notorious characters.

Mihran Poghosyan662 was a rising star, personally close to Serzh Sargsyan. When appointed, he was the youngest general in modern Armenian history and he seemed on the cusp of joining the elite. By 2016 he had risen to Major General of Justice, Armenia’s Chief Compulsory Enforcement Officer. Still only 40 years old, tongues were wagging in Yerevan that Poghosyan was, perhaps, in the frame to one day replace his mentor as President.

How did it all go wrong? On the day we sat on a table adjacent to Poghosyan he had none of the almost arrogant look in his eye that we saw in official portraits of a few years earlier. I would not have recognised him. In a short space of time, the once youthful Chief Compulsory Enforcement Officer had aged a decade.

Armed with a degree in economics, Poghosyan mastered both the complexities of the offshore world and how to maximise the opportunities provided by his office.

His undoing would be the Panama Papers, an unprecedented leak of 11.5 million files from the database of the world’s fourth biggest offshore law firm.

According to Mossack Fonseca data, Poghosyan was a shareholder of three companies registered in Panama. Building on these, media reports went on to detail his stunning self-enrichment, in almost excruciating detail.

His dream of even higher office over, Poghosyan’s shoulders are now somewhat stooped. On this afternoon in Brioche Boulangerie, he sits quietly. Whereas once nearly everyone entering the café would have beaten a path to his table to pay their respects, he is noticeably left alone. His brand is now toxic.

On another day we visit Cafe La Boheme on Pushkin Street, sitting outdoors yet breathing in the eye-wateringly heavy scents of aftershaves and perfumes worn with some enthusiasm. Perhaps too much enthusiasm since it is just 11 in the morning. We are seated next to the winning table in this war of scented attrition. Four associates wafting their fragrances freely. Two of those, I am informed, are big noises in Customs and close allies of Vladimir Tamrazyan,663 who heads the Western Customs House Department of Armenia’s Tax Service.

Tamrazyan is not supping beverages in Cafe La Boheme on this particular morning, but is himself an interesting study in the rise of Armenia’s Eloi.

Hetq Online, published by the Association of Investigative Journalists, notes of Tamrazyan and his spouse: While Tamrazyan declared a mere AMD 7.093 million ($14,700) in income, all in the form of wages, his cash holdings amounted to a whopping AMD 403.2 million, $750,000, and €800,000. Tamrazyan was appointed head of the Western Customs House Department last year. Vladimir’s wife, Rebeka Abrahamyan (daughter of former Armenian Prime Minister Hovik Abrahamyan) also has deep pockets. While Rebeka declared no revenue in 2017, she declared cash assets of AMD 700 million, $900,000, and €800,000. Taken together, the couple’s cash holdings amount to $5.9 million.664

While it would be unkind not to point out that the couple could indeed have quite legitimate sources of income and inheritances, that the Tamrazyans have acquired wealth equivalent to some 400 years of Vladimir’s salary is, really, quite remarkable.

Tamrazyan is not to be seen on this particular day.

Amid clouds of aftershave and scent so pungent it drowns out the sweet smell of my Turkish Coffee (renamed Armenian coffee here, Turkey is a taboo subject), I am treated to a translation of the conversation as it unfolds...

A trip to Barcelona... an expensive whore in Bahrain during F1 week... the frustration of waiting for a new Continental GT Speed Convertible...

Finally, conversation turns a little deeper and their voices drop an octave. The Eloi have business to attend to. It becomes a little hard for my friend and translator to pick out... but something is coming from Turkmenistan. This could obviously be a shipment of cotton fibre from Ashgabat, after all that is one of the Caspian nation’s biggest export earners, although quite why the foursomes would need to gather, out of the office, to discuss a shipment of cotton, in hushed tones, is perhaps less apparent.

We move on to another Eloi hotspot, Meeting Point Cafe on Republic Square itself. During my visits to Yerevan this has proven to be Eloi central.

Part of the Armenia Marriott Hotel, this particular outlet has generous outdoor seating and is a particular favourite for the well-heeled. Almost within reach of the Morlocks, separated by little more than flower boxes, the elite sip up their coffee and flaunt their assiduously collected clothing brands and accessories.

On other tables in the Meeting Point Cafe, pointed out to me are various other elites. Intriguingly a senior aide to the new Prime Minister sits in deep conversation with a noted close associate of former political strongman Serzh Sargsyan.

Power has not so much transferred following the bloody 2018 people’s revolution, as morphed and continued unabated.

Elsewhere, enjoying the sunshine and the company of their fellow Eloi, my companion points out a smattering of deputy ministers and civil service mandarins. Along with the business elite. Indeed, it is the cross-pollination between politics and business that has turned Armenia into a kleptocracy.

Among them we spot Sargsyan’s son-in-law, Mikhail Minasian, whose face and name front business interests that American officials gauged may “simply be the public face of businesses de facto owned by Sargsyan”.665

Also in evidence is another prominent Eloi, controversial businessman-cum-parliamentarian Samvel Aleksanyan, whose commercial success was built upon being a bellwether in Yerevan. He maintained an inexplicable commercial hold over Armenia’s flour, wheat, sugar and poultry imports, and built retail chains, by shifting allegiance from Kocharyan to Sargsyan, and then, in 2018, defecting from Sargsyan’s Republican Party of Armenia when the political tide turned.666

WikiLeaks released the United States Department report ‘09YEREVAN798’ which states that: Sargsyan had a head start on Kocharyan when it came to gaining control of lucrative economic assets. Though both men are Karabakhis, Sargsyan came to Yerevan and took up the first of a string of powerful ministerial posts five years earlier than Kocharyan, who remained in Nagorno-Karabakh until 1998. In ten years as president, Kocharyan caught up to Sargsyan and it evolved to the point that most of the dominant business and economic sectors were in some way linked to one of the two of them.667

In a 2009 cable to her bosses in Washington, sensationally released by WikiLeaks, former United States Ambassador Marie L. Yovanovitch had stated plainly that: ...Armenian politics is winner-take-all, and this very much applies not only to the political spoils, but very often to the leading business and economic spoils as well. This is one reason that Armenian politics have become so implacable...668

Yovanovitch also answered the question of why, even during our visit to Yerevan in the immediate post-Sargsyan era, political figures and business leaders continued to circulate freely and, indeed, brazenly. The Ambassador stated that: Business elites are thus deeply intertwined with political power, and vice versa, and each has an incentive to preserve the status quo... business leaders may have been canny enough not to burn bridges, instead cultivating civil relations across the political divide.

...most Armenian business leaders are now actively seeking patronage “krisha” relationships in Moscow, as a hedge against local political risk, because they are uncertain how Armenian politics will unfold and they want additional leverage to protect themselves if the local climate turns against them. Some of these Russian “krishas” (is krisha a person or a relationship?) are oligarchs, while others are senior military or security service generals or other Kremlin insiders.669

It takes several days and several visits to the Meeting Point Cafe to catch sight of our biggest prize. If we were birdwatchers, perhaps our greatest achievement would be seeing a Spix’s macaw. If we were stamp collectors, the ultimate achievement would be the Penny Blue. As Eloi watchers, sightings of Gagik Tsarukyan670 represents perhaps the pinnacle.

A former world champion in arm-wrestling, Tsarukyan muscled his way up through his business associations with Robert Kocharyan. He shipped his allegiance to Serzh Sargsyan when it suited. Having made billions through his associations with both leaders, he did what any self respecting Armenian oligarch does, turns to politics and, if possible, leads a self-created party. During the Sargsyan era his Prosperous Armenia was an enthusiastic part of the ruling coalition.

With the emergence of Nikol Pashinyan, Tsarukyan aligned himself with his rising star and leading his Prosperous Armenia Party into new Parliamentary Elections on the coat-tails of his association with Pashinyan.

In December 2018, Tsarukyan went as far as turning on his erstwhile mentor, Kocharyan and declaring, as the ex-President faced mounting legal issues, that “There is a law, everyone is equal before it.”671

Sipping on an expresso in the Meeting Point Cafe, Tsarukyan wears the self- satisfied gloat of a man who has guaranteed political-continuity for his many business enterprises.

While the Eloi have continued to sun themselves and the Morlocks have kept their appointed distance, the nation has slipped towards banana republic status.

United States and Denmark-based GAN Integrity highlights the worst cases of global maleficence. Its ‘Armenia Corruption Report’ is a litany of troubling reading, which only needs to be summarised in order to paint a broad picture: Businesses operating or planning to invest in Armenia face high corruption risks. Progress has been made to fight pervasive corruption; however, the close relationship between oligarchs, and political and business circles raise concerns about cronyism and influence...

The judiciary presents businesses with a high risk... Bribes and irregular payments are often exchanged to obtain favourable court decisions. The system is not independent: it is subordinate to elites...

The police present business with a high risk of corruption. There are consistent problems with police misconduct that impairs law enforcement...

Public services present businesses with moderate risks. Bribes and irregular payments are often exchanged when applying for public utilities... Almost three in every ten companies expect to give gifts to officials to obtain a construction permit...

Companies face high risks of corruption within the tax administration... Armenia’s customs administration holds a high risk of corruption. Transparency at the border is rated as low and irregular payments and bribes are widely exchanged when dealing with customs...

Bribes are widely exchanged to obtain contracts and licenses.672

Wells noted in chapter seven of his seminal novel that: The Eloi, like the Carolingian Kings, had decayed to a mere beautiful futility. They still possessed the earth on sufferance: since the Morlocks, subterranean for innumerable generations, had come at last to find the daylit surface intolerable.673

How a small segment of Armenian society had come to gather such wealth, and an exclusivity on power, is the story of a ‘deep state’, a nation created of an independent people, yet ultimately run just for the benefit of the few who rule them.

During my time criss-crossing Armenia and Nagorno-Karabakh, it had become clear that this is a story of populations mercilessly split into Eloi and Morlocks. For the latter, the election of Pashinyan represents perhaps the most viable opportunity to break an economic death spiral that has clung to the nation like a cancer since Levon Ter-Petrosyan became head of state upon independence and enhanced after the corrosive Robert Kocharyan became President in February 1998.

The decline of civic institutions, Armenia’s freezing out of global trade, and widening domestic inequality in income and wages, has guaranteed that most of the country’s citizens have been excluded.

Since the end of World War Two, a broad consensus in support of global economic integration as a force for peace and prosperity has been a pillar of the international order. Since the fall of the Berlin Wall a generation ago, the power of markets in promoting economic progress has been universally recognised.

Across this brave new era, Armenia has failed to capitalise. Global living standards have risen faster than at any point in history. Material progress has coincided with even more rapid progress in combating hunger, empowering women, promoting literacy and extending life.

Every single day since 1990, there have been a global average of 108,000 fewer people in extreme poverty.

Beyond the narrow confines of Yerevan’s Republic Square, where the Eloi sun themselves, this has not been reflected in Armenia. Political upheaval, poverty and an exodus of young people to Russia to find work have taken their toll on the former Soviet Republic.

In October 2017, Yerevan-based ARKA News Agency reported:

Approximately 45% of Armenia’s population is on the verge of absolute poverty, Aharon Adibekyan, the head of Sociometer polling center, told a news conference today, timed with the World Day for Overcoming Extreme Poverty, marked October 17.

“According to our data, 10% of them are destitute. When we evaluated a programme designed to help school students, it appeared that one of the reasons why children did not attend schools was that they did not have shoes and warm clothes. This way poverty affects the future generations,” Adibekyan said.674

According to the Asian Development Bank, 29.4% of the population lived below the national poverty line in 2016,675 while Hetq Online states that: The poverty level in Armenia today remains higher than the rate registered in 2008, just before the global financial crisis. The country’s official 2016 poverty level was 29.4%, of which 8% were very poor and 1.8% extremely poor. In 2016, and during the previous seven years, the poverty level exceeded that of 2008 by 1.8%... Economic growth in the country in 2016 was only 0.2%, not enough to make a dent in the poverty rate.676

Dismal socio-economic statistics fly like confetti. Wells’ feckless Eloi have no discernible leadership. In Stepanakert and Yerevan there certainly is. And they are responsible for this destitution.